I spent years working as a traditional investment advisor.
That meant getting to know people, having meetings, asking lots of questions, taking notes, preparing lots of documentation, presenting recommendations and executing instructions.
The problem with all of that is that it took a lot of time. On average, it used to take around 12 hours of work to bring on a new client. Each one of those hours has an inescapable cost attached to it, which ultimately had to be carried by that new client. Depending on the work required, the upfront cost could be anywhere from a few hundred dollars upfront, to a few thousand.
Then there would be an average ongoing fee of 1% per year, based on whatever assets the client had invested. Many advisors charge as much 3% per year.
While I loved helping people with their money (probably always will), I did not love the level of inefficiency inherent to the process of onboarding them, due to the high upfront and ongoing costs the client had to pay.
I understood that most of the work I was doing in the onboarding process was adding very little value, but was responsible for almost all of the costs.
My other major issue with this was that I couldn’t help smaller investors. The upfront fees were simply too high.
If you have a traditional advisor, some of this will probably resonate with you...
There’s a lot of data out there to support the notion that, even with the high costs, people do better over the long term when they have an investment advisor. So, while you don’t need one, you’ll likely be much better off over the long term if you have one.
The two main alternatives to having an investment advisor are Big Box finance (I won’t name names, but you know the kinds of firms I’m talking about), or being self-directed. Both of these have some major drawbacks:
Big Box finance isn’t on your side. Their objective is often to get as much money as possible into their own investment products, whether they’re any good or not.
Self-directed investors usually end up losing over the long-run because…well…investing is tough. It takes a lot of work – and a vast amount of information - to be any good at it. Often, people who manage their own money get wiped out completely. Amateur investors tend to ‘go with their gut’. Good luck with that.
Simply put, automation allows us to reduce the onboarding process to it’s simplest and most efficient form. This means no upfront fees – and much lower ongoing fees – while still being able to deliver genuine, qualified, professional investment advice.
Automation isn’t a way to replace human investment advice; it’s a way to make it much more accessible and cost-effective.
The 12 hours of work I would’ve had to do to help a new client as a traditional advisor has been completely replaced by a few minutes spent answering a few simple questions and inputting basic information via our website.
There’s still a team of people working hard to help you get a great long-term result, but you’re accessing that expertise much more efficiently and cost-effectively.
You’re not subsidizing a skyscraper full of guys in suits.
You’re not footing the bill for wasteful/outdated business processes.
You’re doing the minimum, paying a reasonable fee – and still getting the best we have to offer.
This part is pretty straightforward.
If you really look hard at everything your current money manager is doing for you, whether it’s Big Box, or a traditional advisor, even if you know them personally and speak with them regularly, it likely doesn’t amount to much.
In the majority of cases, it amounts to practically nothing beyond investing your money. If it’s a traditional advisor doing this for you, you’re probably paying too much. If it’s Big Box, you’re just another cog in the fee machine. If you’re happy with that, then keep going.
If some part of you is sure that there’s something better out there for you, then give us a try. We’ve worked hard to make sure that it’s as simple as possible to make the move to Afinitiv. Simply visit our website, answer a few questions – and open your account. We take care of everything else.
Once your funds have rolled over to your new Afinitiv account, the break-up with your old arrangements is complete – and you’ll never have to look back.
It’s imperative that whoever is managing your money is in a healthy relationship with it. If you’re not feeling that relationship, it’s probably time to start looking elsewhere.
What do I mean by a ‘healthy relationship’? As with most things in business, it all comes down to the structure of incentive.
The following is not exhaustive and won’t guarantee that your portfolio crushes it every year (because nobody’s does), but here’s a quick 4-point checklist to see if your money is with the right people:
· Do they have a genuine why? If they don’t, then there’s simply no ethical compass guiding how they will deal with your money, or with you.
· Do they serve other types of client, who they might value more than you? If so, their best thinking is probably going to someone other than you. Some large firms even bet against their clients, big time. As horrifying as that sounds, it's probably more common than you might think.
· Are they putting your money into their own branded investments, or are they selecting from investments issued by others? If they’re using their own investments for everything, there’s a lot you might be missing out on with respect to management style, exposure type and asset class. There will possibly also be a bunch of hidden fees.
· Are they a publicly traded company, or privately owned? Large public companies tend to be more accountable to their stockholders than to their clients. Privately-owned businesses are more likely to be accountable only to their clients.
Needless to say, if your money is somewhere that doesn’t tick any of these, or at least a couple of them, then now is probably good time to think about making that move…
Customer Relationship Summary
(c) Copyright Afinitiv LLC 2023